A Taliban splinter group in the tribal belt has executed a former intelligence officer and prominent jihadi activist, raising fears for two other hostages being held by the same group.

Khalid Khawaja's body was found dumped by the road near Mir Ali, a notorious centre of militant activity in North Waziristan.

Khawaja, a retired Inter-Service Intelligence (ISI) agent, had been shot in the head and chest. A note pinned to his body warned that other "American spies" would face a similar fate.

A previously unknown group named Asian Tigers claimed responsibility in an email to the Guardian titled "khalid khawaja (episode is over)". It read: "Khalid Khwaja is no more ... We have given the deadline in order to approve our demands. The ISI and government didn't take it serious. This is the last warning to set your minds. What would be the next?"

Khawaja was a retired Inter-Services Intelligence (ISI) official who boasted of his links with Osama bin Laden. He was kidnapped just over a month ago while travelling with another well known ex-ISI official, Colonel Imam, and Asad Qureshi, a journalist. Their fate is not known.

The militants recently sent the Guardian hostage videos of the three men from the same email address. Asian Tigers is believed to be a cover name for a group of Punjabi sectarian militants belonging to the notorious Lashkar I Jhangvi group.

In recent weeks sectarian attacks on Shias have increased in the tribal belt, including one against a UN aid distribution centre. Asian Tigers is demanding the release of dozens of militant prisoners in Afghanistan in return for hostages, stoking suspicions that it has links with a larger Taliban group.

Colonel Imam, whose real name is Sultan Amir Tarar, trained jihadi fighters with CIA funding in the 1980s and helped nurture the Taliban movement in Afghanistan in the 1990s. He is widely referred to as the "father of the Taliban".

The three men entered North Waziristan in late March on a mission to meet and film Taliban groups. Before leaving Islamabad Khawaja told journalists he had proof that the Taliban leader, Hakimullah Mehsud, had survived a CIA drone attack last January – something that a senior ISI official confirmed to the Guardian this week. Khawaja may have promised Qureshi, the journalist, that he would broker a meeting with Mehsud.

Khawaja occupied a prominent, if ambiguous, position in the murky world of Pakistan's jihadi politics. He boasted of being a close associate of Osama bin Laden during the 1980s; last year he said he brokered a meeting between Bin Laden and the opposition leader Nawaz Sharif in 1990 with a view to ousting the government of then prime minister Benazir Bhutto.

After retiring from the ISI Khawaja became a prominent champion of jihadist causes and, when necessary, turned against his former spymasters. He spent time in jail after the Red Mosque siege in central Islamabad in 2007.

He became a human rights activist of sorts, championing the rights of the "disappeared" – Islamist suspects who had been illegally abducted, detained and sometimes tortured by Pakistani intelligence, often at the behest of the CIA and, less frequently, MI6.

But by several accounts he was playing a complex game – one that appears to have caught up with him.

In his hostage video Khawaja said he was secretly working for the ISI during the Red Mosque crisis and helped engineer the arrest of Maulana Abdul Aziz, an extremist cleric who was caught fleeing the mosque wearing a woman's burqa.

Ali Dayan Hasan, a Human Rights Watch researcher who had worked with Khawaja, described him as an ambiguous operator who balanced an implacable belief in jihadist causes with a concern for the plight of those victimised by the "war on terror".

"He made an essential contribution in bringing to attention the disappearances by the Pakistani intelligence agencies at the behest of the US authorities – whatever his motivations," Hasan said.